Vietnam’s cashew exports expected to bounce back vigorously

Positive signs emerging for cashew exports in the first 9 months of 2020 

As the world’s leading cashew exporter in 2019, Vietnam’s cashew exports reached 375,000 tons, worth USD 2.3 billion in the first 9 months of the year, up 12.9% in volume over the same period in 2019. According to the Import and Export Department (Ministry of Industry and Trade), as recorded in September 2020, cashew exports were estimated at 50 thousand tons, worth 298 million USD, up 7.5% in volume and 9.8% in value compared to August 2020.

According to the Department of Agricultural Processing and Market Development, in October 2020, Viet Nam’s cashew exported volume was estimated at 50 thousand tons with the value of 297 million USD. The total export volume in the first 10 months of 2020 is estimated to reach 415 thousand tons and 2.61 billion USD, up 11.5% in volume but down 3.4% in value over the same period in 2019.

The leading export value increased in the Chinese market by 38.25%, meanwhile, the market with the strongest decrease was Russia, down 38.8%. The average export price of WW320 cashew nuts in the first 9 months period reached 3.33 USD per ton, down 14.3% over the same period in 2019.

Source: VIRAC, Vinacas

A closer look at Vietnam’s key export markets

There are currently 101 countries importing Vietnam’s cashew. The US, Netherlands and China remained the top three biggest cashew import markets of Vietnam in the first 8 months of the year, accounting for a market share of 33.5%, 13%, and 12.7%, respectively. On the report of the Vietnam Cashew Association (Vinacas), China’s consumption fell sharply compared to the same period in 2019, while the U.S and European markets remained at a more positive growth rate.

Source: VIRAC, Vinacas

In the first 9 months of 2020, the U.S was the largest importer of cashew in volume with 113,616 tons, equivalent to USD 729 million, accounting for about 30% market share. The market tends to recover in volume, however, slow price increases continue in the first 3 quarters of 2020, export prices to the US market decreased by 13% compared to the same period of 2019. However, exports to the US increased by 13.4% while turnover increased by less than 1%.

Source: VIRAC, Vinacas

Accordingly, the Dutch market reached 46,120 tons, equivalent to nearly USD 300 million, accounting for about 13% of the total volume and total export turnover of cashew nuts of the country. In September 2020, the Chinese market has risen to 2nd place with an import volume of 37,073 tons of cashew, equivalent to a 10% market share. In total 9 months, output and value have declined sharply, especially in January and February – the time of outbreaks in the country. On average, the number of people exported to China decreased by 17%, the value decreased by 34% over the same period in 2019.

Source: VIRAC, Vinacas

In September 2020, Olam Vietnam Company Limited’s branch in Bien Hoa II Industrial Park was Vietnam’s largest exporter with a total output of over 3.3 thousand tons, accounting for 6.2% market share. Next is Long Son JSC, Olam Vietnam JSC, Hoang Son 1 JSC with export volume reaching nearly 2.1 thousand tons (3.95%), 1.9 thousand tons (3.63%), and 1.4 thousand tons (2.67%).

Vinacas members exported 23,400 tons of cashew products in September 2020, accounting for more than 44% market share.

Source: VIRAC, Vinacas

Exports are expected to achieve the target in 2020

In terms of output

The industry is strongly affected by domestic production difficulties, many small and medium enterprises in Binh Phuoc province, Dong Nai have closed due to fluctuations between supply and demand. China’s demand is growing; however, the number of orders are decreased due to the strict quality requirements of importers.

The cashew price continuously rises in the domestic market, which is even higher than the FOB price. Vietnam’s exports of cashew in the rest months of 2020 will continue to recover strongly since the year-end holidays of major importers such as the US, India, EU, and China are coming.

Moreover, the seasonal demand increased from the main export markets such as the USA, EU, India, China. Also, cashew nut prices are expected to increase due to limited supply when many small and medium cashew processing suppliers in Vietnam and India reduce their manufacturing activities.

Export prices after Covid impact

According to the Department of Processing and Agricultural Market Development, the Covid-19 epidemic has had a huge impact on Vietnam’s oil industry in recent years. The constantly falling price of raw materials causes Vietnam’s processing enterprises to be affected when stocking raw materials at high prices but export prices are relatively low.

Vietnamese enterprises usually reserve raw cashew from the end of the previous year to serve export processing for the following year. In early 2020, crude cashew prices fell to $1,000 per tonne, dragging down the price of raw materials, causing the business to suffer losses, forced production to hold, or even suspended operations. The average export price of cashew nuts in September 2020 is estimated at 5,960 USD per ton, up 2.1% compared to August 2020 but down 13.5% compared to September 2019. In the first 9 months of 2019, the average export price of cashew nuts was estimated at 6,332 USD per ton, down 13.2% over the same period in 2019.

Source: Vinacas

Concerning the cashew market, the trades were more proactive in the last two weeks of September. The price of the cashew is moving from $6,128 to $7,054 per ton for the W320 FOB code. Vietnam’s exports will continue to increase in the remaining months of 2020, due to the demand for year-end holidays of major importers such as the US, India, EU, and China.

The price of cashew is also forecasted to increase slightly due to limited supply in the market because in recent years many small and medium-sized processing facilities in both Vietnam and India reduce capacity, decreasing the supply to the market. Specifically, the export target of 450,000 tons, worth USD 3.2 billion planned by Vietnam’s industry in 2020 is likely to be achieved. The Import and Export Department (Ministry of Industry and Trade) forecasts that cashew exports will increase in the remaining months of this year.

The signals of prosperity

CPTPP market has the advantage of distinct goods produced from participating countries making the block consumption market not that competitive. Vietnam is more beneficial compared to other countries participating in CPTPP when the reduced tariffs roadmap for Vietnamese goods is faster and more plentiful. Vietnam’s cashew nuts are entitled to the 0% tax rate on CPTPP countries as soon as the agreement comes into force. Besides, countries such as Japan, Canada, Peru, Mexico also have commitments to reduce taxes on Vietnam goods.

The entry of EVFTA from August 1, 2020, further facilitates the industry’s entry into the EU market. Enterprises will have the opportunity to increase the export scale of cashew nuts – Viet Nam’s main agricultural exports. Currently, many businesses are ready to expand their exports to this market, immediately after the Covid-19 epidemic is controlled, especially those investing in high-quality technology.

In addition, the long term prospect of consuming cashew will continue to increase because of the health benefits of this product, which is a great opportunity for Vietnam to develop the manufacturing and processing industry. Over the years, cashew kernels and cashew nut processed products have also been produced by many enterprises to export and supply in the domestic market. Moreover, many businesses are actively researching to sell many new products that use cashew as raw material. This is also a strong growth driver to Vietnam’s cashew exports.

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